7 Steps to Successful Strategic Sourcing

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In today’s fast-paced and competitive business environment, the role of Purchasing is more critical than ever. To remain agile and competitive, organizations must adopt tools and strategies that go beyond traditional procurement practices. This webinar introduces a powerful, practical tool designed to help your organization create lasting improvements in supplier and customer relationships. By focusing on strategic sourcing and operational effectiveness, this program aims to support your goals of achieving sustainable cost savings and enhanced collaboration.

Led by industry expert Mike Gozzo, this session will guide you through a proven 7-step strategic sourcing process. You’ll explore category management techniques, relationship-building strategies, and learn how to embrace and manage change for better business outcomes. Whether you’re new to purchasing or a seasoned professional, this session provides actionable insights that can be immediately applied to elevate your procurement performance.

Your Benefits for Attending:
  • Learn how to employ category management to reduce prices effectively.
  • Understand why and how to develop trust-based relationships with suppliers.
  • Learn how to address and manage organizational change in a positive, productive way.
  • Gain insight into the "Targeting Model" for results-driven procurement strategies.
  • Discover a 7-step approach to strategic sourcing with real-world applications.

This webinar is an excellent opportunity to refine your sourcing strategy and build stronger, more effective supplier partnerships. Attendees will walk away with practical tools and a fresh perspective on procurement's strategic value.

strong>Level: Basic
Format: Group Internet Based
Instructional Method: Live Webcast
NASBA Field of Study: Management Services (2 hours)
Program Prerequisites: None
Advance Preparation: No
  1. Introduction
  2. Content 00:001:42
  3. Presentation Objective 00:002:32
  4. Section One - Introduction 00:04:10
  5. What Is Strategic Sourcing? 00:04:18
  6. Section Two - Developing Strategies - Step 1 00:05:11
  7. Four Stages - Supply Management  00:05:28
  8. Strategic Sourcing Challenges 00:07:46
  9. Critical Areas 00:11:08
  10. Creating Time to be Strategic 00:13:02
  11. Selecting Commodities 00:15:06
  12. Spend Analysis Framework 00:15:35
  13. Categorizing Best Opportunities for Strategic Sourcing 00:17:36
  14. Supply Risk and Profit Impact Model 0019:02
  15. Section Three - Step - 2 - Developing and Managing Suppliers 00:23:00
  16. Evaluating Supplier Performance & Capabilities 00:23:38
  17. Prime Performance Data 00:25:19
  18. The Role of Supplier Self-Evaluation 00:27:16
  19. Qualifying the Supplier 00:28:37
  20. Supplier Checklist 00:29:47
  21. Checklist Cont’d 00:32:57
  22. Performance Evaluation 00:35:43
  23. Evaluation Cont’d 00:38:11
  24. Section Four - Step 3 - Further Tools 00:41:07
  25. Lean Supply Chain 00:41:23
  26. Risk Analysis 00:43:53
  27. What is an FMEA? Failure Mode & Effects Analysis 00:47:15
  28. Failure Mode & Effects Analysis (FMEA) 00:48:19
  29. Understanding “Total Cost”  00:53:25
  30. Procurement Process Cost Factors 00:54:34
  31. Commodity Process Cost Factors 00:55:35
  32. Procurement Operational Performance Costs 00:57:06
  33. The Impact Of Suppliers On Total Company Costs 01:00:59
  34. Simplified Income Statement 01:01:56
  35. Modified Statement 01:02:26
  36. Supplier Role In Quality 01:03:01
  37. Impact On Inventory 01:03:46
  38. Carrying Cost 01:06:23
  39. Section Five - Step 4 Technology Enablers 01:08:41
  40. SRM - Supplier Relationship Mgt. Technology 01:09:04
  41. SRM Technology 01:10:46
  42. Benefits Of Managing SC Network Relationships 01:13:16
  43. Benefits of Managing SC Network Relationships Continued 01:14:54
  44. Section Six - Step 5 Collaborating Internally And Externally 01:15:41
  45. Collaborative Relationships 01:16:19
  46. Transforming The Relationship 01:18:33
  47. Lifetime Customer 01:21:14
  48. Section Seven - Step 6 Attracting And Retaining Supply Management Talent 01:24:29
  49. The Future 01:25:07
  50. Changes In Our Roles 01:26:17
  51. Skill Sets 01:26:28
  52. Technology 01:32:07
  53. Organization 01:32:54
  54. Section Eight - Step 7 Managing And Enabling The Future Supply   Management Organization 01:32:57
  55. Supply Management Vision 01:36:08
  56. Supply Management Mission 01:36:44
  57. Mission Continued  01:38:14
  58. Supplier/Purchasing Performance Metrics 01:39:07
  59. Selected Procurement Measures 01:39:57
  60. Quarterly Business Review (QBR) 01:40:30
  61. Rules For Success 01:42:38
  62. Success 01:44:27
  63. What’s Next 01:46:03
  64. Recap 01:47:10
  65. Question & Answer 01:48:45
  66. Final Comment Reflecting 01:49:07
  67. Presentation Closing 01:50:50
  • Michael W. Gozzo

    Michael W. Gozzo

    Michael W. Gozzo provides consulting and training services to all levels of management and is a Supply Chain Specialist including Purchasing (Supplier Collaboration), Inventory Control and Production/Operations Management.  With many years of practical international experience, he offers a supe [...]

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You must answer all questions during the webinar, view the recording completely and pass the test at the end with 70% correct answers to receive CPE credit.

ISM Credit

Institute of Supply Management

This program may be used for Continuing Education Hours (CEH) toward recertification for programs offered by the Institute for Supply Management®, including the Certified Professional in Supply Management® and Certified Professional in Supplier Diversity®.

QPANJ Credit

Qualified Purchasing Agent - New Jersey

  • 80-20 Pareto Rule 00:13:19
  • Accounts Payable (AP) 00:55:24
  • CIP - Continual Improvement Process 00:30:40, 00:34:39, 01:39:03
  • Commodity 00:14:04, 00:15:13, 00:55:41, 01:31:36, 01:41:03
  • Cost 00:11:27, 00:26:27, 00:32:51, 00:55:41, 01:01:07, 01:02:50, 00:14:48, 01:25:53
  • Electronic Data Interchange (EDI) 00:45:21
  • Enterprise Resource Planning (ERP) 00:07:28, 00:15:53, 01:09:26, 01:29:39
  • FMEA - Failure Mode and Effects Analysis 00:47:36
  • Income Statement 01:01:56
  • Inventory 00:17:54, 00:33:36, 00:57:27, 01:01:15, 01:06:40, 01:10:35
  • ISO (International Organization for Standardization) 00:24:20, 00:34:45, 01:26:55
  • Just In Time (JIT) 00:31:06
  • Key Performance Indicator (KPI) 01:39:20
  • Lead Time 00:33:27, 00:37:31, 00:57:53
  • P-Card 00:16:04
  • Procurement 00:16:00, 00:54:37, 01:44:23
  • Purchase Order 00:55:08
  • Risk Analysis 00:43:55
  • Safety Stock 00:57:31
  • Spend Analysis 00:15:35
  • Strategic Sourcing 00:01:26, 00:04:18, 00:10:04, 00:45:33, 01:49:14
  • Supplier 00:04:36, 00:18:55, 00:20:43, 00:23:31, 00:26:12, 00:27:23, 00:35:42, 00:37:23, 00:38:18, 00:41:45, 00:46:32, 00:55:16, 00:59:08, 01:14:12, 01:16:55, 01:41:11
  • Supplier Relationship Management (SRM) 01:09:18, 01:10:09, 01:13:38, 01:29:53
  • Supply Chain 00:30:23, 00:41:29, 01:15:00, 01:25:04, 01:26:25
  • Supply Chain Management 00:05:42
  • Total Cost 00:53:34
  • Total Quality Management (TQM) 00:31:56, 01:26:58
  • Vendor 00:14:30, 01:10:20, 01:16:43
  • Vendor Managed Inventory (VMI) 00:45:04, 00:45:49, 01:37:57
  • Virtual Management 01:29:34

80-20 Pareto Rule: The Pareto principle states that, for many events, roughly 80% of the effects come from 20% of the causes.

Accounts Payable (AP): The amount of money a company owes creditors (suppliers, etc.) in return for goods and/or services they have delivered.

CIP - Continual Improvement Process: A continual improvement process, also often called a continuous improvement process, is an ongoing effort to improve products, services, or processes. These efforts can seek "incremental" improvement over time or "breakthrough" improvement all at once.

Commodity: A basic good used in commerce that is interchangeable with other goods of the same type.

Cost: The sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location

Enterprise Resource Planning (ERP): Refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations.

Failure Mode Effects Analysis (FMEA): Failure mode and effects analysis is the process of reviewing as many components, assemblies, and subsystems as possible to identify potential failure modes in a system and their causes and effects.

ISO (International Organization for Standardization): The International Organization for Standardization (ISO) is an international nongovernmental organization made up of national standards bodies that develops and publishes a wide range of proprietary, industrial, and commercial standards.

Income Statement: One of the three primary financial statements used to assess a company's performance and financial position (the two others being the balance sheet and the cash flow statement). The income statement summarizes the revenues and expenses generated by the company over the entire reporting period. (investinganswers.com)

Inventory: A company's inventory typically involves goods in three stages of production: raw goods, in-progress goods, and finished goods that are ready for sale. Inventory or stock refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilization.

Key Performance Indicator (KPI) : A Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets.

Lead Time: The number of days from when a company places an order for supplies, to when those items arrive.

Procurement: Procurement is the process of finding and agreeing to terms, and acquiring goods, services, or works from an external source, often via a tendering or competitive bidding process. Procurement is used to ensure the buyer receives goods, services, or works at the best possible price when aspects such as quality, quantity, time, and location are compared.

Purchase Order: A legal contract between a buyer and a vendor. It lists the materials or services to be purchased on specified terms and conditions (quantity, price / pricing conditions, delivery date).

Risk Analysis: Risk analysis is a technique used to identify and assess factors that may jeopardize the success of a project or achieving a goal.

Safety Stock : Safety stock, also known as buffer stock or backup inventory, is extra inventory that a business keeps in storage to reduce the risk of running out of stock. It can help businesses prepare for unexpected fluctuations in demand, supply chain issues, or inaccurate forecasts.

Spend Analysis: A spend analysis is the process of cataloging business spend data and reviewing it in order to identify inefficiencies, root out unnecessary costs, remove waste and redundancies, and find gaps within the supply chain to make changes that will ultimately reduce costs.

Strategic Sourcing: Strategic sourcing is an approach to supply chain management that formalizes the way information is gathered and used so an organization can use its consolidated purchasing power to find the best possible values in the marketplace and align its purchasing strategy to business goals.

Supplier: A supplier is an entity that supplies goods and services to another organization. A supplier is usually a manufacturer or a distributor. A distributor buys goods from multiple manufacturers and sells them to its customers. Similar Terms. A supplier is also known as a vendor.

Supplier Relationship Management (SRM) : Supplier relationship management is the discipline of strategically planning for, and managing, all interactions with third-party organizations that supply goods and/or services to an organization The objective of SRM is to maximize the value of those interactions.

Supply Chain: A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. The supply chain also represents the steps it takes to get the product or service from its original state to the customer.

Supply Chain Management: In commerce, supply chain management, the management of the flow of goods and services, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods as well as end to end order fulfillment from point of origin to point of consumption.

Total Cost: Total cost is the total expenditure incurred to produce some type of output. From an accounting perspective, the total cost concept is more applicable to financial reporting, where overhead costs must be assigned to certain assets.

Total Quality Management (TQM): Total quality management consists of organization-wide efforts to "install and make permanent climate where employees continuously improve their ability to provide on-demand products and services that customers will find of particular value."

Vendor: A vendor is a person or business that supplies goods or services to a company. Another term for the vendor is the supplier. In many situations, a company presents the vendor with a purchase order stating the goods or services needed, the price, delivery date, and other terms.

Vendor Managed Inventory (VMI): Vendor-managed inventory (VMI) is an inventory management technique in which the supplier of goods, usually the manufacturer, is responsible for optimizing the inventory a distributor holds.

Virtual Management: Virtual management, is the supervision, leadership, and maintenance of virtual teams.

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Frequently Asked Questions

Strategic sourcing is a structured, data-driven approach to supply chain management that goes beyond simply purchasing goods and services at the lowest price. Unlike traditional procurement, which tends to be transactional and reactive, strategic sourcing formalizes the way organizations gather and analyze information to leverage their consolidated purchasing power and align supplier relationships with broader business goals. It involves spend analysis, category management, supplier evaluation, risk analysis, and long-term relationship development. The goal is not just cost reduction, but sustainable value creation through stronger supplier partnerships, reduced supply chain risk, and improved operational performance. Organizations that adopt strategic sourcing practices consistently outperform those using traditional procurement—achieving better pricing, higher quality, and more resilient supply chains over time.
A proven strategic sourcing process typically follows seven key steps: (1) Spend analysis—identifying and categorizing all organizational spend to prioritize sourcing opportunities; (2) Supplier development and evaluation—assessing supplier capabilities, performance, and fit; (3) Applying analytical tools such as risk analysis and Failure Mode and Effects Analysis (FMEA) to understand supply vulnerabilities; (4) Leveraging technology enablers like Supplier Relationship Management (SRM) systems and ERP integration; (5) Internal and external collaboration—aligning cross-functional teams and building trust-based supplier partnerships; (6) Attracting and retaining supply management talent with the skills needed for modern procurement; and (7) Managing the future supply management organization through defined metrics, quarterly business reviews, and a clear supply management vision and mission. Mastering these steps positions procurement as a true strategic function within the organization.
Effective supplier evaluation in strategic sourcing starts with establishing clear performance criteria and a structured assessment process. This typically includes reviewing a supplier's financial stability, quality certifications (such as ISO standards), delivery performance, capacity, and responsiveness. Supplier self-evaluations and scorecards help gather data consistently, while on-site audits and prime performance data provide deeper insight into operational capabilities. Beyond evaluation, supplier development focuses on building trust-based, long-term relationships that go beyond transactional interactions. This means sharing forecasts and business goals, collaborating on continuous improvement initiatives, and investing in joint problem-solving. Organizations that treat key suppliers as strategic partners—rather than interchangeable vendors—consistently achieve better pricing, quality, and supply reliability. Training in strategic sourcing teaches procurement professionals how to identify, qualify, and develop high-value supplier relationships.
Total cost of ownership (TCO) is a procurement analysis framework that looks beyond the initial purchase price of goods or services to account for all costs incurred across the full lifecycle of the relationship—including quality costs, inventory carrying costs, logistics, lead time variability, supplier-related defects, administrative overhead, and risk exposure. For example, a supplier offering a 10% lower price may actually cost more in total when factoring in higher defect rates, longer lead times, or unreliable delivery. TCO analysis gives procurement teams a more accurate and complete picture of the true cost of sourcing decisions, enabling smarter tradeoffs and better negotiations. It also helps organizations identify where supplier improvements—in quality, packaging, delivery, or service—can drive meaningful bottom-line savings beyond what purchase price negotiations alone can achieve.
Supplier Relationship Management (SRM) technology provides a centralized platform for managing all aspects of supplier interactions—from onboarding and performance tracking to collaboration, risk monitoring, and contract management. By consolidating supplier data and automating key workflows, SRM systems give procurement teams real-time visibility into supplier performance, compliance status, and risk exposure across the entire supply base. This enables faster identification of underperforming suppliers, more productive business reviews, and better-informed sourcing decisions. SRM technology also supports collaborative relationship-building by enabling shared forecasting, joint improvement initiatives, and streamlined communication. When integrated with ERP systems, SRM tools further improve supply chain efficiency by aligning procurement data with financial, inventory, and production planning functions. Organizations that invest in SRM technology typically see measurable improvements in supplier performance, cost control, and supply chain resilience.